G15 urges government to commit to a 10-year rent settlement in the spring budget

The G15 has called on the government to set a 10-year, index-linked rent settlement and reinstate rent convergence in the upcoming spring budget. 

The group of London’s largest housing associations said the chancellor, Jeremy Hunt, had an opportunity to show the government’s commitment to tackling the housing crisis in his financial statement on Wednesday 6 March.

As part of the measures to ensure “long-term certainty” and “vital investment in existing homes and services”, the G15 called for the extension of the Affordable Homes Programme (AHP).

It said that doubling the duration of the AHP from five years to 10 would create “greater funding predictability”.

The housing associations have also requested that the government announce an updated Decent Homes Standard with funding to deliver it and to award the remainder of the Social Housing Decarbonisation Fund.

The government relaunched its review of the Decent Homes Standard in June 2023 and is expected to outline the next steps for the review this spring.

In September, the National Housing Federation (NHF) wrote to energy secretary Grant Shapps and net zero secretary Clare Coutinho advocating for the entire remaining funding for SHDF beyond 2025 to be released in one go.

The NHF said this move would help unlock supply chains and provide regulatory certainty for housing associations.

>> See also: Homes England says affordable housing delivery will be lower than NAO estimates

>> See also: G15 calls for £15bn a year in AHP grant funding amid steep drop in starts

>> See also: Boosting development to 300,000 homes a year and beyond: Housing Today’s initial recommendations

Other measures requested by the G15 ahead of the spring budget include welfare reform to support customers struggling with the cost of living, extending the building safety fund to affordable rented homes and introducing VAT relief on repairs.

“Last year, members invested £1.5bn into repairs and maintenance, equivalent to over £2,000 per home, and it’s likely that this figure will be even higher this year,” explained Fiona Fletcher-Smith, chair of the G15.

”In addition, we will be investing at least £4 billion to deal with the building safety crisis and estimate it will cost at least £11 billion to meet net zero by 2050. This is putting enormous pressure on our capacity and so we are calling for VAT to be removed from housing association activity. The irrecoverable VAT for just one G15 member is £30m per year – money that we could be investing in homes.”

On the financial landscape more generally, Fletcher-Smith said: “G15 members are investing record amounts to ensure the safety and quality of our existing homes, improve services, build new homes and work towards achieving net zero by 2050. This investment requires long-term planning and commitment, but we are operating in an environment that is filled with uncertainty.

“Key for us is the uncertainty around rents, and so we are calling for rent convergence to be reinstated with a cast-iron commitment to indexation. A reintroduction of rent convergence would also provide fairness by ensuring residents pay comparable rents based on the size of their property and location.

“We are calling for greater clarity on funding, to give the sector confidence when making long-term business plans and forging partnerships. The Social Housing Decarbonisation Fund and Affordable Homes Programme should be longer and more flexible, with indexation to account for current and future cost inflation.

Fletcher-Smith added: “Making the case for long-term investment isn’t limited to tackling the immediate and critical issues of undersupply and affordability. Every £1 invested in social housing delivers at least £2.70 in economic benefits, supporting long-term growth and underpinning local jobs, skills and supply chains.

“The Spring Budget is an opportunity to grasp the potential of investing in our homes. This will mean we can finally start to imagine a future where everyone has a place to call home, in a community that supports them to live well.”